While individual motorists are feeling the pain at the pump from near daily increases in the per gallon price of gasoline, the rising prices are likely to stunt the already meager growth in Mississippi’s overall economy, a state senior economist says.
Combined with the Jan. 1 return of a 2 percent portion of the payroll tax Congress had suspended in 2011, higher gas prices mean even less money in the pockets of Mississippians.
State economists said in a first quarter economic forecast that reviving the full payroll tax (the Social Security tax) would lower the state’s 2013 economic growth by a full 1 percent.
USA Today calculated in a recent report that a household making $42,000 a year is paying out an extra $60 a month in payroll taxes. With the average gasoline price having risen 45 cents a gallon since mid January, the likelihood of lower consumer spending – and the consequences that has for the overall economy – are clear.
“The increase in gas prices definitely has a noticeable impact on Mississippi,” said Marianne hill, senior state economist.
Mississippi’s low income levels make it especially vulnerable to demands on individual paychecks from the likes of payroll taxes and gasoline price spikes, she said.
“You may recall that (I think it was the Natural Resources Council) found that Mississippi was more impacted than any other state by a rise in the cost of gasoline — consumption of gasoline per capita is near the top of the states, plus per capita incomes are the lowest,” Hill said in an email response to questions about the impact of higher gasoline prices.
The national average for a gallon of regular gasoline is $3.75, up 45 cents since Jan. 20. Experts say prices should continue rising at least 5 cents a week until early April, USA Today reported this week.
On Jackson’s busy County Line Road, prices ranged from $3.59 a gallon to $3.79 a gallon.
However, consumers in some metropolitan areas, such as Southern California, are already paying nearly $5.20 a gallon, up more than 75 cents since December lows, USA Today reports.
The American Automobile Association expects prices to keep increasing the next two months, probably peaking in April. This year’s run-up is not only larger and faster than recent years but is beginning earlier, AAA reports. The national average in 2011 increased by just seven cents during the same 33 day period and in 2012 it increased by 18 cents, the motorist-support organization says.
One reason for the earlier price increase is the trend of U.S. refineries performing seasonal maintenance and making the switch-over to summer blend gasoline production earlier in the year, said Michael Green, AAA spokesman. “Regional supplies can decrease when refineries go offline and subsequently markets are more sensitive during the changeover period to refinery disruptions that would further squeeze supply, as we have seen this year.”
AAA also cites positive economic news nationally for driving up gasoline prices by generating increased demand.
Meanwhile, Mississippi catfish producer Bill Battle worries that higher gasoline process will leave people will fewer dollars to spend at restaurants that serve his farm-raised product.
“The first thing that goes is the night out on the town,” said Battle, owner of Tunica’s Pride of the Pond. “When gas goes up, there goes your weekend eat-out money.”